Amendments for SB21-169
Senate Journal, May 4
After consideration on the merits, the Committee recommends that SB21-169 be amended
as follows, and as so amended, be referred to the Committee of the Whole with favorable
recommendation.
Amend printed bill, strike everything below the enacting clause and substitute:
"SECTION 1. Legislative declaration. (1) The general assembly
finds that:
(a) Increasingly, insurers use external consumer data and information
sources, algorithms, and predictive models in their insurance rating,
underwriting, claims, and other business practices;
(b) Although such tools have the potential to benefit insurers and
consumers by simplifying and expediting insurance rating, underwriting, and
claims processes, the accuracy and reliability of external consumer data and
information sources can vary greatly, and some algorithms and predictive
models may lack a sufficient rationale for use in insurance practices; and
(c) The use of particular external consumer data and information
sources, algorithms, and predictive models by insurers may have a significant
negative impact not only on the availability and affordability of insurance for
protected classes of consumers, but also on the utilization of such insurance.
(2) The general assembly therefore declares that in order to ensure that
all Colorado residents have fair and equitable access to insurance products, it
is necessary to:
(a) Prohibit:
(I) Unfair discrimination based on an individual's race, color, national
or ethnic origin, religion, sex, sexual orientation, or gender identity in any
insurance practice; and
(II) The use of external consumer data and information sources,
algorithms, and predictive models, which use has the result of unfairly
discriminating against an individual based on an individual's race, color,
national or ethnic origin, religion, sex, sexual orientation, or gender identity;
and
(b) After notice and rule-making by the commissioner of insurance,
require insurers that use external consumer data and information sources,
algorithms, and predictive models to control for, or otherwise demonstrate that
such use does not result in, unfair discrimination.
SECTION 2. In Colorado Revised Statutes, add 10-3-1104.9 as
follows:
10-3-1104.9. Insurers' use of external consumer data and
information sources, algorithms, and predictive models - consideration of
protected class status prohibited - unfair discrimination prohibited - rules
- stakeholder process required - investigations - definitions.
(1) NOTWITHSTANDING SECTION 10-3-1104 (1)(f), AN INSURER SHALL NOT,
WITH REGARD TO ANY INSURANCE PRACTICE:
(a) UNFAIRLY DISCRIMINATE BASED ON AN INDIVIDUAL'S RACE, COLOR,
NATIONAL OR ETHNIC ORIGIN, RELIGION, SEX, SEXUAL ORIENTATION, OR GENDER
IDENTITY; OR
(b) PURSUANT TO RULES ADOPTED BY THE COMMISSIONER, USE ANY
EXTERNAL CONSUMER DATA AND INFORMATION SOURCE, ALGORITHM, OR
PREDICTIVE MODEL THAT UNFAIRLY DISCRIMINATES AGAINST AN INDIVIDUAL
BASED ON AN INDIVIDUAL'S RACE, COLOR, NATIONAL OR ETHNIC ORIGIN,
RELIGION, SEX, SEXUAL ORIENTATION, OR GENDER IDENTITY.
(2) (a) THE COMMISSIONER SHALL ADOPT RULES FOR THE
IMPLEMENTATION OF THIS SECTION.
(b) THE COMMISSIONER SHALL ENGAGE IN A STAKEHOLDER PROCESS
PRIOR TO THE ADOPTION OF RULES FOR ANY TYPE OF INSURANCE THAT INCLUDES
CARRIERS, PRODUCERS, CONSUMER REPRESENTATIVES, AND OTHER INTERESTED
PARTIES. THE COMMISSIONER SHALL HOLD STAKEHOLDER MEETINGS FOR
STAKEHOLDERS OF DIFFERENT TYPES OF INSURANCE TO ENSURE SUFFICIENT
OPPORTUNITY TO CONSIDER FACTORS AND PROCESSES RELEVANT TO EACH SUCH
TYPE OF INSURANCE. THE COMMISSIONER SHALL PROVIDE NOTICE OF SUCH
STAKEHOLDER MEETINGS ON THE DIVISION WEBSITE, AND STAKEHOLDER
MEETINGS SHALL BE OPEN TO THE PUBLIC.
(3) (a) AFTER THE STAKEHOLDER PROCESS DESCRIBED IN SUBSECTION
(2) OF THIS SECTION, THE COMMISSIONER SHALL ADOPT RULES FOR SPECIFIC
TYPES OF INSURANCE, BY INSURANCE PRACTICE, WHICH RULES ESTABLISH
MEANS BY WHICH AN INSURER MAY DEMONSTRATE THAT IT HAS TESTED
WHETHER ITS USE OF EXTERNAL CONSUMER DATA AND INFORMATION SOURCES,
ALGORITHMS, OR PREDICTIVE MODELS UNFAIRLY DISCRIMINATES BASED ON AN
INDIVIDUAL'S RACE, COLOR, NATIONAL OR ETHNIC ORIGIN, RELIGION, SEX,
SEXUAL ORIENTATION, OR GENDER IDENTITY. ANY SUCH RULES SHALL NOT
BECOME EFFECTIVE UNTIL JANUARY 1, 2023, AT THE EARLIEST, FOR ANY TYPE
OF INSURANCE.
(b) RULES ADOPTED PURSUANT TO THIS SECTION MUST REQUIRE EACH
INSURER TO:
(I) PROVIDE INFORMATION TO THE COMMISSIONER CONCERNING THE
EXTERNAL CONSUMER DATA AND INFORMATION SOURCES USED BY THE INSURER
IN THE DEVELOPMENT AND IMPLEMENTATION OF ALGORITHMS AND PREDICTIVE
MODELS FOR A PARTICULAR TYPE OF INSURANCE AND INSURANCE PRACTICE;
(II) PROVIDE AN EXPLANATION OF THE MANNER IN WHICH THE INSURER
USES EXTERNAL CONSUMER DATA AND INFORMATION SOURCES, ALGORITHMS,
AND PREDICTIVE MODELS FOR THE PARTICULAR TYPE OF INSURANCE AND
INSURANCE PRACTICE;
(III) ESTABLISH AND MAINTAIN A RISK MANAGEMENT FRAMEWORK
THAT IS REASONABLY DESIGNED TO DETERMINE, TO THE EXTENT PRACTICABLE,
WHETHER THE INSURER'S USE OF EXTERNAL CONSUMER DATA AND INFORMATION
SOURCES, ALGORITHMS, AND PREDICTIVE MODELS UNFAIRLY DISCRIMINATES
AGAINST INDIVIDUALS BASED ON THEIR RACE, COLOR, NATIONAL OR ETHNIC
ORIGIN, RELIGION, SEX, SEXUAL ORIENTATION, OR GENDER IDENTITY;
(IV) PROVIDE AN ASSESSMENT OF THE RESULTS OF THE RISK
MANAGEMENT FRAMEWORK AND ACTIONS TAKEN TO MINIMIZE THE RISK OF
UNFAIR DISCRIMINATION, INCLUDING ONGOING MONITORING; AND
(V) PROVIDE AN ATTESTATION BY THE INSURER'S CHIEF RISK OFFICER
THAT THE INSURER HAS IMPLEMENTED THE RISK MANAGEMENT FRAMEWORK
APPROPRIATELY ON A CONTINUOUS BASIS.
(c) INFORMATION SUBMITTED BY INSURERS TO COMPLY WITH THIS
SECTION IS SUBJECT TO THE "COLORADO OPEN RECORDS ACT", PART 2 OF
ARTICLE 72 OF TITLE 24.
(4) PURSUANT TO SECTION 10-3-1106, THE COMMISSIONER MAY
EXAMINE AND INVESTIGATE AN INSURER'S USE OF AN EXTERNAL CONSUMER
DATA AND INFORMATION SOURCE, ALGORITHM, OR PREDICTIVE MODEL IN ANY
INSURANCE PRACTICE. INSURERS SHALL COOPERATE WITH THE COMMISSIONER
AND THE DIVISION IN ANY EXAMINATION OR INVESTIGATION UNDER THIS
SECTION.
(5) IN THE EVENT THAT IT IS DETERMINED, AS A RESULT OF AN INSURER'S
PROPER COMPLIANCE WITH THE REQUIREMENTS OF THIS SECTION, THAT THE
INSURER'S USE OF EXTERNAL CONSUMER DATA AND INFORMATION SOURCES,
ALGORITHMS, OR PREDICTIVE MODELS IS FOUND TO UNFAIRLY DISCRIMINATE
AGAINST INDIVIDUALS BASED ON THEIR RACE, COLOR, NATIONAL OR ETHNIC
ORIGIN, RELIGION, SEX, SEXUAL ORIENTATION, OR GENDER IDENTITY, THE
COMMISSIONER MAY ISSUE AN ORDER TO THE INSURER, WHICH ORDER SHALL BE
LIMITED TO:
(a) ANY NECESSARY RESTITUTION FOR CONSUMERS; AND
(b) ANY OTHER ACTION REQUIRED TO BE TAKEN BY THE INSURER TO
REMEDY THE UNFAIR DISCRIMINATION ON A PROSPECTIVE BASIS.
(6) AS USED IN THIS SECTION, UNLESS THE CONTEXT OTHERWISE
REQUIRES:
(a) "ALGORITHM" MEANS A COMPUTATIONAL PROCESS THAT INFORMS
HUMAN DECISION-MAKING IN INSURANCE PRACTICES.
(b) "EXTERNAL CONSUMER DATA AND INFORMATION SOURCE" MEANS
A DATA OR AN INFORMATION SOURCE THAT IS USED BY AN INSURER TO
SUPPLEMENT TRADITIONAL UNDERWRITING OR OTHER INSURANCE PRACTICES OR
TO ESTABLISH LIFESTYLE INDICATORS THAT ARE USED IN INSURANCE PRACTICES.
"EXTERNAL CONSUMER DATA AND INFORMATION SOURCE" INCLUDES CREDIT
SCORES, SOCIAL MEDIA HABITS, LOCATIONS, PURCHASING HABITS, HOME
OWNERSHIP, EDUCATIONAL ATTAINMENT, OCCUPATION, LICENSURES, CIVIL
JUDGMENTS, AND COURT RECORDS.
(c) "INSURANCE PRACTICE" MEANS MARKETING, UNDERWRITING,
PRICING, UTILIZATION MANAGEMENT, REIMBURSEMENT METHODOLOGIES,
CLAIMS MANAGEMENT, AND FRAUD DETECTION IN THE TRANSACTION OF
INSURANCE.
(d) "PREDICTIVE MODEL" MEANS A PROCESS OF USING MATHEMATICAL
AND COMPUTATIONAL METHODS THAT EXAMINE CURRENT AND HISTORICAL
DATA SETS FOR UNDERLYING PATTERNS AND CALCULATE THE PROBABILITY OF
AN OUTCOME.
(e) "UNFAIR DISCRIMINATION BASED ON AN INDIVIDUAL'S RACE, COLOR,
NATIONAL OR ETHNIC ORIGIN, RELIGION, SEX, SEXUAL ORIENTATION, OR GENDER
IDENTITY" INCLUDES THE USE OF AN EXTERNAL CONSUMER DATA AND
INFORMATION SOURCE, ALGORITHM, OR PREDICTIVE MODEL WHOSE PREDICTIVE
CAPABILITY IS DERIVED IN SUBSTANTIAL PART FROM ITS CORRELATION WITH
MEMBERSHIP IN ONE OR MORE OF SUCH PROTECTED CLASSES.
SECTION 3. In Colorado Revised Statutes, add 10-4-1405 as follows:
10-4-1405. Exemption from testing and reporting requirements.
NOTWITHSTANDING SECTION 10-3-1104.9, THE REQUIREMENTS OF SAID SECTION
10-3-1104.9 DO NOT APPLY TO INSURERS OF EXEMPT COMMERCIAL
POLICYHOLDERS, AS DEFINED BY RULE PURSUANT TO SECTION 10-4-1402.
SECTION 4. Act subject to petition - effective date. This act takes
effect at 12:01 a.m. on the day following the expiration of the ninety-day period
after final adjournment of the general assembly; except that, if a referendum
petition is filed pursuant to section 1 (3) of article V of the state constitution
against this act or an item, section, or part of this act within such period, then
the act, item, section, or part will not take effect unless approved by the people
at the general election to be held in November 2022 and, in such case, will take
effect on the date of the official declaration of the vote thereon by the
governor.".
Senate Journal, May 12
SB21-169 by Senator(s) Buckner; also Representative(s) Ricks and Esgar--Concerning protecting
consumers from unfair discrimination in insurance practices.
Amendment No. 1, Business, Labor & Technology Committee Amendment.
(Printed in Senate Journal, May 4, page(s) 749-751 and placed in members' bill files.)
Amendment No. 2(L.008), by Senator Buckner.
Amend the Business, Labor, and Technology Committee Report, dated May 3,
2021, page 4, after line 14 insert:
"(6) NOTWITHSTANDING ANY PROVISION OF THIS SECTION TO THE
CONTRARY, NOTHING IN THIS SECTION REQUIRES AN INSURER TO COLLECT FROM
AN APPLICANT OR POLICYHOLDER THE RACE, COLOR, NATIONAL OR ETHNIC
ORIGIN, RELIGION, SEX, SEXUAL ORIENTATION, OR GENDER IDENTITY OF AN
INDIVIDUAL.".
Renumber succeeding subsection accordingly.
Amendment No. 3(L.009), by Senator Buckner.
Amend the Business, Labor, and Technology Committee Report, dated May 3,
2021, page 4, after line 14 insert:
"(6) NOTWITHSTANDING ANY PROVISION OF THIS SECTION TO THE
CONTRARY, THIS SECTION DOES NOT APPLY TO:
(a) TITLE INSURANCE, AS DEFINED IN SECTION 10-11-102 (8); OR
(b) BONDS EXECUTED BY QUALIFIED SURETY COMPANIES PURSUANT TO
PART 3 OF ARTICLE 4 OF THIS TITLE 10.".
Renumber succeeding subsection accordingly.
Amendment No. 4(L.010), by Senator Buckner.
Amend the Business, Labor, and Technology Committee Report, dated May 3,
2021, page 3, strike lines 36 through 38 and substitute:
"(c) DOCUMENTS, MATERIALS, AND OTHER INFORMATION IN THE
POSSESSION OR CONTROL OF THE DIVISION THAT ARE OBTAINED BY, CREATED
BY, OR DISCLOSED TO THE COMMISSIONER OR ANY OTHER PERSON PURSUANT TO
THIS SECTION OR ANY RULES ADOPTED PURSUANT TO THIS SECTION ARE
RECOGNIZED AS PROPRIETARY AND CONTAINING TRADE SECRETS. ALL SUCH
DOCUMENTS, MATERIALS, AND OTHER INFORMATION ARE CONFIDENTIAL AND
PRIVILEGED; ARE NOT SUBJECT TO DISCLOSURE UNDER THE "COLORADO OPEN
RECORDS ACT", PART 2 OF ARTICLE 72 OF TITLE 24, OR OTHER OPEN RECORDS,
FREEDOM OF INFORMATION, SUNSHINE, OR SIMILAR LAW OF THIS STATE; ARE
NOT SUBJECT TO SUBPOENA; AND ARE NOT SUBJECT TO DISCOVERY OR
ADMISSIBLE IN EVIDENCE IN ANY PRIVATE CIVIL ACTION. HOWEVER, THE
COMMISSIONER MAY USE THE DOCUMENTS, MATERIALS, OR OTHER
INFORMATION IN THE FURTHERANCE OF ANY REGULATORY OR LEGAL ACTION
BROUGHT AS PART OF THE COMMISSIONER'S OFFICIAL DUTIES. THE
COMMISSIONER SHALL NOT OTHERWISE MAKE THE DOCUMENTS, MATERIALS, OR
OTHER INFORMATION PUBLIC WITHOUT THE PRIOR WRITTEN CONSENT OF THE
INSURER FROM WHICH THE DOCUMENTS, MATERIALS, OR OTHER INFORMATION
WAS OBTAINED. THE COMMISSIONER MAY MAKE DATA PUBLICLY AVAILABLE IN
AN AGGREGATED OR DE-IDENTIFIED FORMAT IN A MANNER DEEMED
APPROPRIATE BY THE COMMISSIONER.".
Amendment No. 5(L.011), by Senator Smallwood.
Amend the Business, Labor, and Technology Committee Report, dated May 3,
2021, page 2, line 19, strike "NOTWITHSTANDING" and substitute "IN ADDITION
TO THE METHODS AND PRACTICES PROHIBITED PURSUANT TO".
Amendment No. 6(L.013), by Senator Smallwood.
Amend the Business, Labor, and Technology Committee Report, dated May 3,
2021, page 4, after line 14 insert:
"(6) (a) IN THE REPORT SUBMITTED BY THE DEPARTMENT OF
REGULATORY AGENCIES TO THE LEGISLATIVE COMMITTEES OF REFERENCE
DURING THE FIRST TWO WEEKS OF THE 2023 REGULAR LEGISLATIVE SESSION,
PURSUANT TO PART 2 OF ARTICLE 7 OF TITLE 2, THE DIVISION SHALL INCLUDE
INFORMATION CONCERNING ANY CHANGES IN INSURANCE RATES THAT HAVE
RESULTED FROM THE PROHIBITIONS DESCRIBED IN SUBSECTION (1) OF THIS
SECTION.
(b) THIS SUBSECTION (6) IS REPEALED, EFFECTIVE JULY 1, 2023.".
Renumber succeeding subsection accordingly.
As amended, ordered engrossed and placed on the calendar for third reading and final
passage.
House Journal, June 1
35 SB21-169 be amended as follows, and as so amended, be referred to
36 the Committee of the Whole with favorable
37 recommendation:
38
39 Amend reengrossed bill, strike everything below the enacting clause and
40 substitute:
41 "SECTION 1. Legislative declaration. (1) The general
42 assembly finds that:
43 (a) Increasingly, insurers use external consumer data and
44 information sources, as well as algorithms and predictive models using
45 external consumer data and information sources, in their insurance rating,
46 underwriting, claims, and other business practices;
47 (b) Although such tools have the potential to benefit insurers and
48 consumers by simplifying and expediting insurance rating, underwriting,
49 and claims processes, the accuracy and reliability of external consumer
50 data and information sources can vary greatly, and some algorithms and
51 predictive models may lack a sufficient rationale for use in insurance
52 practices; and
53
1 (c) The use of particular external consumer data and information
2 sources, as well as algorithms and predictive models using external
3 consumer data and information sources, by insurers may have a
4 significant negative impact not only on the availability and affordability
5 of insurance for protected classes of consumers, but also on the utilization
6 of such insurance.
7 (2) The general assembly therefore declares that in order to ensure
8 that all Colorado residents have fair and equitable access to insurance
9 products, it is necessary to:
10 (a) Prohibit:
11 (I) Unfair discrimination based on race, color, national or ethnic
12 origin, religion, sex, sexual orientation, disability, gender identity, or
13 gender expression in any insurance practice; and
14 (II) The use of external consumer data and information sources,
15 as well as algorithms and predictive models using external consumer data
16 and information sources, which use has the result of unfairly
17 discriminating based on race, color, national or ethnic origin, religion,
18 sex, sexual orientation, disability, gender identity, or gender expression;
19 and
20 (b) After notice and rule-making by the commissioner of
21 insurance, require insurers that use external consumer data and
22 information sources, algorithms, and predictive models to control for, or
23 otherwise demonstrate that such use does not result in, unfair
24 discrimination.
25 SECTION 2. In Colorado Revised Statutes, add 10-3-1104.9 as
26 follows:
27 10-3-1104.9. Insurers' use of external consumer data and
28 information sources, algorithms, and predictive models -
29 consideration of protected class status prohibited - unfair
30 discrimination prohibited - rules - stakeholder process required -
31 investigations - definitions - repeal. (1) IN ADDITION TO THE METHODS
32 AND PRACTICES PROHIBITED PURSUANT TO SECTION 10-3-1104 (1)(f), AN
33 INSURER SHALL NOT, WITH REGARD TO ANY INSURANCE PRACTICE:
34 (a) UNFAIRLY DISCRIMINATE BASED ON RACE, COLOR, NATIONAL
35 OR ETHNIC ORIGIN, RELIGION, SEX, SEXUAL ORIENTATION, DISABILITY,
36 GENDER IDENTITY, OR GENDER EXPRESSION; OR
37 (b) PURSUANT TO RULES ADOPTED BY THE COMMISSIONER, USE
38 ANY EXTERNAL CONSUMER DATA AND INFORMATION SOURCES, AS WELL
39 AS ANY ALGORITHMS OR PREDICTIVE MODELS THAT USE EXTERNAL
40 CONSUMER DATA AND INFORMATION SOURCES, IN A WAY THAT UNFAIRLY
41 DISCRIMINATES BASED ON RACE, COLOR, NATIONAL OR ETHNIC ORIGIN,
42 RELIGION, SEX, SEXUAL ORIENTATION, DISABILITY, GENDER IDENTITY, OR
43 GENDER EXPRESSION.
44 (2) (a) THE COMMISSIONER SHALL ADOPT RULES FOR THE
45 IMPLEMENTATION OF THIS SECTION.
46 (b) THE COMMISSIONER SHALL ENGAGE IN A STAKEHOLDER
47 PROCESS PRIOR TO THE ADOPTION OF RULES FOR ANY TYPE OF INSURANCE
48 THAT INCLUDES CARRIERS, PRODUCERS, CONSUMER REPRESENTATIVES,
49 AND OTHER INTERESTED PARTIES. THE COMMISSIONER SHALL HOLD
50 STAKEHOLDER MEETINGS FOR STAKEHOLDERS OF DIFFERENT TYPES OF
51 INSURANCE TO ENSURE SUFFICIENT OPPORTUNITY TO CONSIDER FACTORS
52 AND PROCESSES RELEVANT TO EACH TYPE OF INSURANCE. THE
53 COMMISSIONER SHALL PROVIDE NOTICE OF STAKEHOLDER MEETINGS ON
54 THE DIVISION WEBSITE, AND STAKEHOLDER MEETINGS SHALL BE OPEN TO
55 THE PUBLIC.
1 (3) (a) AFTER THE STAKEHOLDER PROCESS DESCRIBED IN
2 SUBSECTION (2) OF THIS SECTION, THE COMMISSIONER SHALL ADOPT
3 RULES FOR SPECIFIC TYPES OF INSURANCE, BY INSURANCE PRACTICE,
4 WHICH RULES ESTABLISH MEANS BY WHICH AN INSURER MAY
5 DEMONSTRATE, TO THE EXTENT PRACTICABLE, THAT IT HAS TESTED
6 WHETHER ITS USE OF EXTERNAL CONSUMER DATA AND INFORMATION
7 SOURCES, AS WELL AS ALGORITHMS OR PREDICTIVE MODELS USING
8 EXTERNAL CONSUMER DATA AND INFORMATION SOURCES, UNFAIRLY
9 DISCRIMINATES BASED ON RACE, COLOR, NATIONAL OR ETHNIC ORIGIN,
10 RELIGION, SEX, SEXUAL ORIENTATION, DISABILITY, GENDER IDENTITY, OR
11 GENDER EXPRESSION. THE RULES SHALL NOT BECOME EFFECTIVE UNTIL
12 JANUARY 1, 2023, AT THE EARLIEST, FOR ANY TYPE OF INSURANCE, AND
13 THE COMMISSIONER SHALL CONSIDER SOLVENCY IMPACTS, IF ANY, TO
14 INSURERS IN ADOPTING THE RULES.
15 (b) RULES ADOPTED PURSUANT TO THIS SECTION MUST REQUIRE
16 EACH INSURER TO:
17 (I) PROVIDE INFORMATION TO THE COMMISSIONER CONCERNING
18 THE EXTERNAL CONSUMER DATA AND INFORMATION SOURCES USED BY
19 THE INSURER IN THE DEVELOPMENT AND IMPLEMENTATION OF
20 ALGORITHMS AND PREDICTIVE MODELS FOR A PARTICULAR TYPE OF
21 INSURANCE AND INSURANCE PRACTICE;
22 (II) PROVIDE AN EXPLANATION OF THE MANNER IN WHICH THE
23 INSURER USES EXTERNAL CONSUMER DATA AND INFORMATION SOURCES,
24 AS WELL AS ALGORITHMS AND PREDICTIVE MODELS USING EXTERNAL
25 CONSUMER DATA AND INFORMATION SOURCES, FOR THE PARTICULAR TYPE
26 OF INSURANCE AND INSURANCE PRACTICE;
27 (III) ESTABLISH AND MAINTAIN A RISK MANAGEMENT
28 FRAMEWORK OR SIMILAR PROCESSES OR PROCEDURES THAT ARE
29 REASONABLY DESIGNED TO DETERMINE, TO THE EXTENT PRACTICABLE,
30 WHETHER THE INSURER'S USE OF EXTERNAL CONSUMER DATA AND
31 INFORMATION SOURCES, AS WELL AS ALGORITHMS AND PREDICTIVE
32 MODELS USING EXTERNAL CONSUMER DATA AND INFORMATION SOURCES,
33 UNFAIRLY DISCRIMINATES BASED ON RACE, COLOR, NATIONAL OR ETHNIC
34 ORIGIN, RELIGION, SEX, SEXUAL ORIENTATION, DISABILITY, GENDER
35 IDENTITY, OR GENDER EXPRESSION;
36 (IV) PROVIDE AN ASSESSMENT OF THE RESULTS OF THE RISK
37 MANAGEMENT FRAMEWORK OR SIMILAR PROCESSES OR PROCEDURES AND
38 ACTIONS TAKEN TO MINIMIZE THE RISK OF UNFAIR DISCRIMINATION,
39 INCLUDING ONGOING MONITORING; AND
40 (V) PROVIDE AN ATTESTATION BY ONE OR MORE OFFICERS THAT
41 THE INSURER HAS IMPLEMENTED THE RISK MANAGEMENT FRAMEWORK OR
42 SIMILAR PROCESSES OR PROCEDURES APPROPRIATELY ON A CONTINUOUS
43 BASIS.
44 (c) THE RULES ADOPTED BY THE COMMISSIONER PURSUANT TO
45 THIS SECTION MUST INCLUDE PROVISIONS ESTABLISHING:
46 (I) A REASONABLE PERIOD OF TIME FOR INSURERS TO REMEDY ANY
47 UNFAIRLY DISCRIMINATORY IMPACT IN AN ALGORITHM OR PREDICTIVE
48 MODEL; AND
49 (II) THE ABILITY OF INSURERS TO USE EXTERNAL CONSUMER DATA
50 AND INFORMATION SOURCES, AS WELL AS ALGORITHMS OR PREDICTIVE
51 MODELS USING EXTERNAL CONSUMER DATA AND INFORMATION SOURCES,
52 THAT HAVE BEEN PREVIOUSLY ASSESSED BY THE DIVISION AND FOUND
53 NOT TO BE UNFAIRLY DISCRIMINATORY.
54
1 (d) DOCUMENTS, MATERIALS, AND OTHER INFORMATION IN THE
2 POSSESSION OR CONTROL OF THE DIVISION THAT ARE OBTAINED BY,
3 CREATED BY, OR DISCLOSED TO THE COMMISSIONER OR ANY OTHER
4 PERSON PURSUANT TO THIS SECTION OR ANY RULES ADOPTED PURSUANT
5 TO THIS SECTION ARE RECOGNIZED AS PROPRIETARY AND CONTAINING
6 TRADE SECRETS. ALL SUCH DOCUMENTS, MATERIALS, AND OTHER
7 INFORMATION ARE CONFIDENTIAL AND PRIVILEGED; ARE NOT SUBJECT TO
8 DISCLOSURE UNDER THE "COLORADO OPEN RECORDS ACT", PART 2 OF
9 ARTICLE 72 OF TITLE 24, OR OTHER OPEN RECORDS, FREEDOM OF
10 INFORMATION, SUNSHINE, OR SIMILAR LAW OF THIS STATE; ARE NOT
11 SUBJECT TO SUBPOENA; AND ARE NOT SUBJECT TO DISCOVERY OR
12 ADMISSIBLE IN EVIDENCE IN ANY PRIVATE CIVIL ACTION. HOWEVER, THE
13 COMMISSIONER MAY USE THE DOCUMENTS, MATERIALS, OR OTHER
14 INFORMATION IN THE FURTHERANCE OF ANY REGULATORY OR LEGAL
15 ACTION BROUGHT AS PART OF THE COMMISSIONER'S OFFICIAL DUTIES. THE
16 COMMISSIONER SHALL NOT OTHERWISE MAKE THE DOCUMENTS,
17 MATERIALS, OR OTHER INFORMATION PUBLIC WITHOUT THE PRIOR
18 WRITTEN CONSENT OF THE INSURER FROM WHICH THE DOCUMENTS,
19 MATERIALS, OR OTHER INFORMATION WAS OBTAINED. THE COMMISSIONER
20 MAY MAKE DATA PUBLICLY AVAILABLE IN AN AGGREGATED OR
21 DE-IDENTIFIED FORMAT IN A MANNER DEEMED APPROPRIATE BY THE
22 COMMISSIONER.
23 (4) PURSUANT TO SECTION 10-3-1106, THE COMMISSIONER MAY
24 EXAMINE AND INVESTIGATE AN INSURER'S USE OF AN EXTERNAL
25 CONSUMER DATA AND INFORMATION SOURCE, ALGORITHM, OR PREDICTIVE
26 MODEL IN ANY INSURANCE PRACTICE. INSURERS SHALL COOPERATE WITH
27 THE COMMISSIONER AND THE DIVISION IN ANY EXAMINATION OR
28 INVESTIGATION UNDER THIS SECTION.
29 (5) (a) IN THE REPORT SUBMITTED BY THE DEPARTMENT OF
30 REGULATORY AGENCIES TO THE LEGISLATIVE COMMITTEES OF REFERENCE
31 DURING THE FIRST TWO WEEKS OF EACH REGULAR LEGISLATIVE SESSION,
32 PURSUANT TO PART 2 OF ARTICLE 7 OF TITLE 2, THE DIVISION SHALL
33 INCLUDE INFORMATION CONCERNING ANY RULES ADOPTED PURSUANT TO
34 THIS SECTION AND ANY CHANGES IN INSURANCE RATES THAT HAVE
35 RESULTED FROM THE PROHIBITIONS DESCRIBED IN SUBSECTION (1) OF THIS
36 SECTION.
37 (b) THIS SUBSECTION (5) IS REPEALED, EFFECTIVE JULY 1, 2025.
38 (6) NOTWITHSTANDING ANY PROVISION OF THIS SECTION TO THE
39 CONTRARY, THIS SECTION DOES NOT APPLY TO:
40 (a) TITLE INSURANCE, AS DEFINED IN SECTION 10-11-102 (8);
41 (b) BONDS EXECUTED BY QUALIFIED SURETY COMPANIES
42 PURSUANT TO PART 3 OF ARTICLE 4 OF THIS TITLE 10; OR
43 (c) INSURERS ISSUING COMMERCIAL INSURANCE POLICIES; EXCEPT
44 THAT THIS SECTION DOES APPLY TO INSURERS THAT ISSUE BUSINESS
45 OWNERS' POLICIES OR COMMERCIAL GENERAL LIABILITY POLICIES, WHICH
46 BUSINESS OWNERS' POLICIES OR COMMERCIAL GENERAL LIABILITY
47 POLICIES HAVE ANNUAL PREMIUMS OF TEN THOUSAND DOLLARS OR LESS.
48 (7) NOTHING IN THIS SECTION:
49 (a) REQUIRES AN INSURER TO COLLECT FROM AN APPLICANT OR
50 POLICYHOLDER THE RACE, COLOR, NATIONAL OR ETHNIC ORIGIN,
51 RELIGION, SEX, SEXUAL ORIENTATION, DISABILITY, GENDER IDENTITY, OR
52 GENDER EXPRESSION OF AN INDIVIDUAL; OR
53 (b) MAY BE CONSTRUED TO:
54
1 (I) PROHIBIT THE USE OF, OR REQUIRE LIFE, ANNUITY, LONG-TERM
2 CARE, OR DISABILITY INSURERS TO TEST, MEDICAL, FAMILY HISTORY,
3 OCCUPATIONAL, DISABILITY, OR BEHAVIORAL INFORMATION RELATED TO
4 A SPECIFIC INDIVIDUAL, WHICH INFORMATION, BASED ON ACTUARIALLY
5 SOUND PRINCIPLES, HAS A DIRECT RELATIONSHIP TO MORTALITY,
6 MORBIDITY, OR LONGEVITY RISK UNLESS SUCH INFORMATION IS
7 OTHERWISE INCLUDED IN THE TESTING OF AN ALGORITHM OR PREDICTIVE
8 MODEL THAT ALSO USES EXTERNAL CONSUMER DATA AND INFORMATION
9 SOURCES;
10 (II) PROHIBIT THE USE OF, OR REQUIRE LIFE, ANNUITY, LONG-TERM
11 CARE, OR DISABILITY INSURERS TO TEST, TRADITIONAL UNDERWRITING
12 FACTORS BEING USED FOR THE EXCLUSIVE PURPOSE OF DETERMINING
13 INSURABLE INTEREST OR ELIGIBILITY FOR COVERAGE UNLESS SUCH
14 FACTORS ARE OTHERWISE INCLUDED IN THE TESTING OF AN ALGORITHM
15 OR PREDICTIVE MODEL THAT ALSO USES EXTERNAL CONSUMER DATA AND
16 INFORMATION SOURCES;
1104 17 (III) AMEND, MODIFY, OR SUPERSEDE SECTION 10-3-
18 (1)(f)(III) OR (1)(f)(IV); OR
19 (IV) PROHIBIT THE USE OF OR REQUIRE THE TESTING OF
20 LONGSTANDING AND WELL-ESTABLISHED COMMON INDUSTRY PRACTICES
21 IN SETTLING CLAIMS OR TRADITIONAL UNDERWRITING PRACTICES UNLESS
22 SUCH PRACTICES OR FACTORS ARE OTHERWISE INCLUDED IN THE TESTING
23 OF AN ALGORITHM OR PREDICTIVE MODEL THAT ALSO USES EXTERNAL
24 CONSUMER DATA AND INFORMATION SOURCES.
25 (9) AS USED IN THIS SECTION, UNLESS THE CONTEXT OTHERWISE
26 REQUIRES:
27 (a) "ALGORITHM" MEANS A COMPUTATIONAL OR MACHINE
28 LEARNING PROCESS THAT INFORMS HUMAN DECISION MAKING IN
29 INSURANCE PRACTICES.
30 (b) (I) "EXTERNAL CONSUMER DATA AND INFORMATION SOURCE"
31 MEANS A DATA OR AN INFORMATION SOURCE THAT IS USED BY AN INSURER
32 TO SUPPLEMENT TRADITIONAL UNDERWRITING OR OTHER INSURANCE
33 PRACTICES OR TO ESTABLISH LIFESTYLE INDICATORS THAT ARE USED IN
34 INSURANCE PRACTICES. "EXTERNAL CONSUMER DATA AND INFORMATION
35 SOURCE" INCLUDES CREDIT SCORES, SOCIAL MEDIA HABITS, LOCATIONS,
36 PURCHASING HABITS, HOME OWNERSHIP, EDUCATIONAL ATTAINMENT,
37 OCCUPATION, LICENSURES, CIVIL JUDGMENTS, AND COURT RECORDS.
38 (II) THE COMMISSIONER MAY PROMULGATE RULES TO FURTHER
39 DEFINE "EXTERNAL CONSUMER DATA AND INFORMATION SOURCE" FOR
40 PARTICULAR LINES OF INSURANCE AND INSURANCE PRACTICES.
41 (c) "INSURANCE PRACTICE" MEANS MARKETING, UNDERWRITING,
42 PRICING, UTILIZATION MANAGEMENT, REIMBURSEMENT METHODOLOGIES,
43 AND CLAIMS MANAGEMENT IN THE TRANSACTION OF INSURANCE.
44 (d) "PREDICTIVE MODEL" MEANS A PROCESS OF USING
45 MATHEMATICAL AND COMPUTATIONAL METHODS THAT EXAMINE
46 CURRENT AND HISTORICAL DATA SETS FOR UNDERLYING PATTERNS AND
47 CALCULATE THE PROBABILITY OF AN OUTCOME.
48 (e) "UNFAIRLY DISCRIMINATE" AND "UNFAIR DISCRIMINATION"
49 INCLUDE THE USE OF ONE OR MORE EXTERNAL CONSUMER DATA AND
50 INFORMATION SOURCES, AS WELL AS ALGORITHMS OR PREDICTIVE MODELS
51 USING EXTERNAL CONSUMER DATA AND INFORMATION SOURCES, THAT
52 HAVE A CORRELATION TO RACE, COLOR, NATIONAL OR ETHNIC ORIGIN,
53 RELIGION, SEX, SEXUAL ORIENTATION, DISABILITY, GENDER IDENTITY, OR
54 GENDER EXPRESSION, AND THAT USE RESULTS IN A DISPROPORTIONATELY
55 NEGATIVE OUTCOME FOR SUCH CLASSIFICATION OR CLASSIFICATIONS,
1 WHICH NEGATIVE OUTCOME EXCEEDS A REASONABLE CORRELATION TO
2 THE UNDERLYING INSURANCE PRACTICE, INCLUDING LOSSES AND COSTS
3 FOR UNDERWRITING.
4 SECTION 3. Act subject to petition - effective date. This act
5 takes effect at 12:01 a.m. on the day following the expiration of the
6 ninety-day period after final adjournment of the general assembly; except
7 that, if a referendum petition is filed pursuant to section 1 (3) of article V
8 of the state constitution against this act or an item, section, or part of this
9 act within such period, then the act, item, section, or part will not take
10 effect unless approved by the people at the general election to be held in
11 November 2022 and, in such case, will take effect on the date of the
12 official declaration of the vote thereon by the governor.".
13
14
House Journal, June 3
21 Amendment No. 1, Health & Insurance Report, dated May 28, 2021, and
22 placed in member's bill file; Report also printed in House Journal, June 1,
23 2021.
24
25 Amendment No. 2, by Representative Esgar.
26
27 Amend the Health and Insurance Committee Report, dated May 28, 2021,
28 page 2, line 19, strike "consideration of protected class status
29 prohibited -".
30
31 Page 5, strike lines 6 through 9 and substitute "INCLUDE:
32 (I) INFORMATION CONCERNING ANY RULES ADOPTED PURSUANT TO
33 THIS SECTION;
34 (II) INFORMATION CONCERNING ANY CHANGES IN INSURANCE
35 RATES THAT HAVE RESULTED FROM THE PROHIBITIONS DESCRIBED IN
36 SUBSECTION (1) OF THIS SECTION;
37 (III) A SUMMARY OF THE STAKEHOLDER ENGAGEMENT PROCESS
38 DESCRIBED IN SUBSECTION (2)(b) OF THIS SECTION; AND
39 (IV) A DESCRIPTION OF DATA SOURCES, IF ANY, DISCUSSED DURING
40 THE STAKEHOLDER ENGAGEMENT PROCESS, WHICH DATA SOURCES
41 INSURERS MAY USE TO COMPLY WITH THIS SECTION.".
42
43 Page 6, line 10, strike "(9)" and substitute "(8)".
44
45 Page 6, line 41, strike "A" and substitute "THE".
46
47 As amended, ordered revised and placed on the Calendar for Third
48 Reading and Final Passage.
49